Euro banking deal fails to impress markets

FILE - In this Thursday, Oct. 18, 2012, file photo, traders work on the floor of the New York Stock Exchange. World stock markets fell Friday as disappointing U.S. corporate earnings provided a reason to book profits on recent gains while investors waited for a progress report from European leaders concluding a summit on the region's debt crisis. Wall Street also looks set to retreat.

A sketchy agreement on how to create a single European banking supervisor failed to impress markets on Friday, with stocks drifting lower ahead of another round of U.S. corporate earnings statements and after a shock trading update from Google.

LONDON — A sketchy agreement on how to create a single European banking supervisor failed to impress markets on Friday, with stocks drifting lower ahead of another round of U.S. corporate earnings statements and after a shock trading update from Google.

On Thursday, Google surprised investors by publishing by mistake its worse-than-expected earnings ahead of schedule. After billions were wiped off the internet giant's market value, the company suspended trading in its shares.

Microsoft also disappointed with its latest update, contributing to a broad retreat in technology stocks.

"After what had started to look like a relatively upbeat season, investors are now looking a little more wary," said Fawad Razaqzada, market strategist at GFT Markets.

Highlights later include earnings reports from McDonald's, General Electric and Honeywell.

By mid-morning in Europe, Germany's DAX was down 0.3 percent at 7,412 while the CAC-40 in France fell 0.2 percent to 3,527. The FTSE 100 index of leading British shares as flat at 5,918.

Wall Street was poised for a subdued opening with both Dow futures and the broader S&P 500 futures down 0.1 percent.

An agreement early Friday by the leaders of the 17 euro countries to push ahead with a single banking supervisory body failed to support markets. The leaders remained vague on key details, such as when the supervisor will be up and running.

Some investors and analysts worry that Europe's politicians may have lost the incentive to fix things quickly now that market turmoil has subsided. The borrowing costs of countries like Spain have eased since the European Central Bank unveiled in September a new bond-buying program.

"Europe's politicians seem to have kicked things into the long grass for a few more months as they fail to agree on steps towards banking supervision or closer integration," said Rebecca O'Keeffe, head of investment at Interactive Investor. "As interest rates continue to fall, so the need to act decisively diminishes."

The unconvincing result of the EU summit left the euro trading 0.2 percent lower on the day at $1.3050.